A New Perspective on Temperature Shocks

Nooman Rebei

No 2025/042, IMF Working Papers from International Monetary Fund

Abstract: Prevailing research suggests that climate change disproportionately burdens emerging markets and developing economies with greater output losses compared to advanced economies, positing that colder regions are less impacted than their warmer counterparts. This study revisits the empirical relationship between temperature fluctuations and real growth, with a novel focus on differentiating between transitory versus permanent temperature shifts, aligning naturally with the definitions of weather and climate change, respectively. Our findings reveal that richer and colder economies exhibit better adaptation only in response to weather shocks, whereas the pattern reverses for climate change disturbances, challenging the conclusions of previous studies.

Keywords: Climate change; Climate damages; Temporary and permanent shocks; Kalman filter; Bayesian estimation; climate change disturbance; climate projection data; transitory shock; temperature shock; definitions of weather; Natural disasters; Global (search for similar items in EconPapers)
Pages: 35
Date: 2025-02-21
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